Calculating the profitability of a taxi
A taxi that runs every day is not necessarily profitable. Here is the method to know what it really earns, month after month, and how long it takes to pay back its purchase price.
1. What comes in: revenue
It all starts with each day's revenue. Record it day after day, including the weak days: it is the average over the month that counts, not the best day. The days the taxi does not run — breakdown, paperwork, absent driver — count too: they bring in nothing, but the costs carry on.
2. What goes out: expenses
Count every expense on the vehicle, not just the big ones: maintenance, parts, tyres, repairs, labour, insurance, administrative fees. It is the small forgotten expenses that make a vehicle look more profitable than it is.
Separate breakdown repairs (engine, transmission, brakes, suspension and steering, tyres) from routine maintenance: when the former go up, the vehicle is wearing out, and its profitability is about to fall.
3. What the driver earns
The driver's pay — and the controller's, if there is one — comes off the revenue before you can talk about profit. Whether it is a commission, a daily rate or a fixed salary, it must be counted for every month. The guide Commission, daily rate or fixed salary compares the three modes.
4. The month's profit
The calculation fits on one line:
Month's profit = revenue − expenses − driver's pay (and controller's)
An example, with fictitious figures:
Revenue: 26 days × 20,000 FCFA = 520,000 FCFA
Driver's commission, 25% of revenue: − 130,000 FCFA
Month's expenses (maintenance, tyres, share of insurance…): − 110,000 FCFA
Month's profit: 280,000 FCFA
Illustrative figures, not market averages: replace them with your own.
5. The real question: how long until the taxi pays for itself
A monthly profit does not tell you whether the purchase was a good deal. To know that, compare it with the capital invested: the vehicle's purchase price, plus the costs linked to the purchase.
Payback time = capital invested ÷ usual monthly profit
Capital invested: 4,200,000 FCFA
Usual monthly profit: 280,000 FCFA
Payback time: 4,200,000 ÷ 280,000 = 15 months
For the "usual profit", do not take your best month: take the middle value of your recent months (the median). A single excellent month would make the payback time look shorter than it is. And if the profit is nil or negative, there is no payback time to calculate: the vehicle is not paying for itself.
6. The mistakes that distort the calculation
- looking only at revenue, without taking off expenses and pay;
- forgetting the small expenses, or those paid in cash and never written down;
- recalculating past months with today's commission rate;
- judging on a single month, good or bad;
- forgetting the days off the road.
What MOUTOUKA calculates for you
You enter revenue and expenses, from the phone; the driver's pay is calculated with each revenue entry and frozen at that moment. The balance gives the result for the period, vehicle by vehicle. The payback-time estimate follows exactly the method above: capital invested = purchase price plus "Vehicle purchase" expenses, usual profit = median of the active months over the last 12 months, and no estimate before 3 observed months or in the event of a deficit. Each vehicle also receives a performance grade from A to D. The details are on the Features page.